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Are undergraduate-level courses, taken by a graduate student, counted toward the graduate level $5,250 annual exclusion?

Yes. Graduate tuition remission is not covered under section 117(d) of the Internal Revenue Code, which fully excludes undergraduate coursework. Graduate tuition remission is, instead, covered under section 127 of the Code, which sets an annual limit of $5,250 for the exclusion of employer-paid tuition expenses for both undergraduate and graduate coursework. Therefore, all coursework taken by a graduate student, regardless of the level, counts toward the annual exclusion.